The installation and maintenance of offshore wind farms require personnel and equipment which has to be transported to and from offshore sites. Specialised vessels, typically small monohulls or catamaran vessels that carry up to 12 passengers, offer such services.
These vessels were originally fixed on the basis of BIMCO SUPPLYTIME which is the standard time charter for service vessels in the offshore oil and gas industry. In 2013 however BIMCO released the WINDTIME as a standard charter party for personnel transfer and support vessels servicing offshore wind farms.
WINDTIME has been very well received in the market with approximately 750 final forms purchased on the BIMCO platform since its release. The template is an example of a successful and practical standard document for an increasing number of fixtures of personnel transfer and support vessels for the offshore wind industry. It represents the first and important step towards the standardisation of documents in the marine renewable sector.
Charter period and hire
The WINDTIME follows the traditional time charter structure whereby the owner procures that the vessel and crew are ready to carry out the charterer’s orders for the agreed charter period. However, since the transfer of personnel and equipment to offshore turbines will normally only be carried out during daylight, the WINDTIME provides for the concept of a “Working Day”. This is defined on the basis of a specified number of “Working Hours” per day. Clause 8 establishes that services carried out during the established “Working Day” are covered by the general working day rate payable by the charterer.
The charterer may however require additional work on any particular day(s), provided this does not contravene applicable laws and regulations. In such case, an excess hourly rate is payable. Alternatively, the charterer may require a general increase to a 24 hour “Working Day”, in which case a pre-agreed 24 hour rate shall apply.
In case the WINDTIME form is used for vessels utilised in operations for wind farms in deeper waters where the vessel remain at the site for longer periods of time, the 24 hour rate or a more differentiated rate structure may be suitable.
Delay in delivery
If the owner fails to deliver the vessel to the charterer within the specified cancelling date, the charterer may cancel the charter. In this respect the WINDTIME also requires the owner to inform charterer as soon as reasonably practicable if the owner knows or ought reasonably to know that they will be unable to deliver the vessel by the cancelling date, after which the charterers may elect to cancel the charter within three days.
Irrespective of whether the charter is cancelled or maintained the charterer could suffer losses due to the delay or non-delivery, for example, due to disruption of the charterer’s installation operations. Clause 2 (d), (e) and (f) provide three options regarding the owner’s liability in this situation one of which will need to be selected at the time of fixing
The option in Clause 2(d) follows the SUPPLYTIME, and provides that neither party shall have any liability following cancellation of the charter due to late delivery.
The option in Clause 2(e) provides that the charterer’s cancellation or acceptance of late delivery shall be “without prejudice” to other rights either party may have. This leaves the owner’s potential liability open and to be determined in accordance with the applicable background law.
Finally, Clause 2 (f) provides for liquidated damages to be payable by the owner if delivery is delayed beyond the cancelling date. These liquidated damages accrue at a specifically agreed rate or, if not specified, at the charter hire rate until the owner has delivered the vessel or a substitute or the charterer has cancelled the charter. This liability is subject to a cap which must be specifically agreed, and owners would be well advised to always include such cap to avoid an open ended exposure for liquidated damages. If the parties have not made a selection, Clause 2 (f) will be the default option used in the charter.
Liabilities and indemnities
The liability regime in Clause 16 (a) of the WINDTIME is based on a “knock for knock” principle for damage to personnel and property. Designed to avoid duplication of insurance and reduce litigation, this principle provides that each contracting party bears responsibility for (i) loss or damage to property and (ii) personal injury or death of personnel of the relevant party, its contractors and other related “group” parties as specified. The allocation of liability applies irrespective of cause, but contrary to SUPPLYTIME there is an exception where the loss, damage, injury or death results from act or omission of the indemnified party’s group committed with the intent to cause same or recklessly and with knowledge that such loss, damage, injury or death would probably result.
Clause 17 splits the risk of pollution so that the owner is liable (and shall indemnify the charterer from) pollution emanating from the vessel as a result of acts or omissions of the owner or their personnel and the charterer is liable for pollution emanating from anything towed by the vessel or cargo laden upon the vessel or her tow as well as property of the charterer group irrespective of cause.
Clause 16 (b) of the charter include a mutual exclusion of liability for the other party’s (i) loss of profit, loss of use or loss of production and (ii) consequential loss or damage, but not an express right to be indemnified from such losses suffered by the other party’s contractors etc. In a situation where e.g. one of the subcontractors or customers of the charterer puts forward a claim against the owner for loss of profit due to delays in installation work caused by the vessel, the owner may not have a recourse claim against the charterer for such liability. As these types of liability may be substantial, the parties are advised to include a right to be indemnified from such claims from the other party’s subcontractors, customers, etc. We also note that the recently released SUPPLYTIME 2017 has a more comprehensive exclusion of liability for these types of losses that the parties similarly could incorporate.
WINDTIME provides for a mutual liability cap for liability arising out of the charter party (with certain exclusions e.g. in respect of property damage or pollution as mentioned above) which may be specifically agreed or amount to 20 % of the total sum of hire due pursuant to the charter period as per Clause 16 (c). The exclusions from the cap should however be noted when considering the overall risk exposure under the charter.